Starting last week, we saw some of the market’s biggest momentum trades sell-off on basically positive earnings reports.
I’m referring to Apple (Nasdaq:
AAPL), VMWare (NYSE:VMW), F5 Networks (Nasdaq:FFIV) and many of the other tech companies that are helping companies lower costs or are associated with the surge in handheld gadgetry.

But last night, Qualcomm (Nasdq:QCOM) reported good numbers and the stock is actually higher. NetFlix
(Nasdaq:NFLX), too. Though not in the same sector, Caterpillar (NYSE:
CAT) is also up after good numbers.

Could we be seeing a shift from the “sell first” mentality that emerged last week? Well, if we are, it’s coming against a backdrop of deteriorating economic news.

New unemployment claims jumped back up to the 450K level, durable goods orders took a nosedive, and Standard & Poor’s cut Japan’s credit rating on debt concerns, and also said that Portugal, Ireland Greece and Spain were stuck in recession for 18 months.

*****Now, let’s get to your letters on the “austerity vs. growth” topic. I received a ton of letters from you, with
some very well though out responses. I wish I could reprint them all, but I’d probably have to pay for the extra bandwidth this letter would require.

So I’ve selected some representative ideas, and edited them as well. Oh, and so you know, austerity is the unanimous
choice.

*****Yochanan Q. wrote:

As an investor, it’s easy to say that I ONLY
want what will bring growth figures to our economy….that does
not mean
that that is the right choice. We can
continue deficit spending in hopes of economic growth but such growth
will NOT be bigger than a growth in the deficit!

Too often, we as Americans are more concerned with
what goes on in our own backyard than what’s affecting the country as a
whole. Hard to imagine that changing much, but it’s a good
sentiment.

*****Jon V. wrote:

Why in a global market economy with open
boarders and free trade are AMERICANS paying 3 to 10 times what Europeans
and Canadians pay for Rx drugs?
While I do believe in free markets, the Feds policy is imposed
and not a function of market forces. I believe that the removal of income
generation from fixed incomers in also a huge part of the lack of
consumer activity. But part of the decline in the status of our country
has been the shifting of wealth from the people to the banks.

The observation that lowered interest rates
effects a wealth transfer from fixed income investments is a good point.
It’s almost as if Americans pay twice, we contribute to Social Security
for the current retired generation. Then our own retirement income gets
redirected back to support economic growth.

I personally do not support completely free
markets. Aren’t high prescription prices (and high health care costs in
general) a function of a free pricing environment? I would also add that
the wealth transfer to banks might be even more stark in a completely
free market. Some regulation that reflects the will and needs of the
people is a good thing…

*****George G. wants to change the
question:

Austerity or growth: Are those really the only
two choices?

Good point. Too bad politicians, and many
Americans alike, tend to think in either/or terms.

*****Leigh P.wrote:

For the long term heath of the Nation
,,,

Published by Wyatt Investment Research at